Regulation (continued) Unaudited information 258 Vodafone Group Plc Annual Report 2024
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required the disconnection of unverified SIMs in this category by 13 February 2023. The TCRA conducted inspections and subsequently following an inspection on 04 January 2024, the TCRA issued a compliance order against Vodacom Tanzania for failure to adhere to the regulations by allowing multiple SIM card registrations exceeding the allowed limits. Vodacom Tanzania made submissions to the TCRA and attended a hearing in this regard. The TCRA issued its final decision issuing a penalty of TZS 14 million (approx. €5,000). Similarly, in Lesotho, the Minister of Communication introduced new SIM Registration regulations, which must be complied with by 24 June 2023. The regulations require the operator to enact biometric registration, establish a central database with the Communications Authority (‘LCA’), re-register SIMs with a six-month timeframe and enforce penalties of Maloti 5,000 per non-compliant SIM card. On 1 February 2024, Vodacom Lesotho suspended all unregistered SIMs for 3 months (01 Feb- 30 April). Customers will be able to re-activate their numbers during the 90 days period, however, post 30 April 2024 all numbers not re-activated will be terminated. Spectrum In Mozambique, the 5G auction consultation proposes a reserve price of $15m per 2x5 of 700MHz, $15m per 2.6GHz and $15m per 3.5GHz. The price for 2.6GHz and 3.5GHz is comparatively excessive against both Vodafone and neighbouring markets benchmarks. The proposed draft auction rules are also against best practice. The Communications Regulator has indicated a willingness to introduce coverage obligations in exchange for marginally reduced pricing, but these are yet to be reflected in the official auction rules. The final auction rules are pending the approval of the cabinet of ministers. In Egypt, the NRA (‘NTRA’) intends to initiate issuance of 5G radio frequency spectrum licences; the initial proposal included an indicative reserve price of US$450 million and successful bidders are expected to incur US$450 million in 5G-related network investment. Subsequently, the NTRA submitted a new proposal for the 5G license terms and conditions at a cost of US$150 million for 15 years with extension to all current licenses without spectrum. Vodafone Egypt did not accept this. On 1 January 2024, Vodafone Egypt received an offer from the NTRA for the 5G license entailing a license fee of USD 173m for a 15 year license terms and renewal of the 2G/3G/4G licenses until 2038. This offer was valid until 15 January 2024. The President had also directed that if the offer was not accepted by at least one of the operators, the NTRA will be required to issue new offer entailing USD 150m and renewal of existing licenses. On 15 January 2024, Vodafone Egypt rejected the offer, however, the government owned Telecom Egypt accepted the offer and announced its acquisition of a 5G license. On this basis, the government is trying to push operators to obtain the 5G license under similar terms and has currently closed off any possibility of further negotiations. For Vodafone Egypt, the proposal is not aligned with its business case. In Turkey, the NRA issued a Board Decision regarding the Procedure and Principles on 2G license extension, fee, and obligations. Procedures and principles applied to Vodafone Turkey and Turkcell’s licenses that expired on 27 April 2023 and TT Mobil’s license that will expire in 2026. The extension fee for Vodafone Turkey (900 MHz) is €120 million for a six-year extension until 30 April 2029 (excluding 18% VAT). Vodafone Turkey paid the extension fee in advance with a capital injection and signed the extension agreement effective as of 27 April 2023. Therefore, the 2G license was extended until 30 April 2029. Regulatory and legal disputes and fines In the DRC, Vodacom DRC is in ongoing negotiations with the NRA (‘ARPTC’) in relation to new regulatory fees that were first introduced in March 2022. On 22 October 2022, the MNOs (including Vodacom DRC), Minister of Communications and ARPTC reached an agreement and signed a MoU on the new regulatory fees, setting out revised fees
and modality of payment. The MoU also provides for resolution of any pending fines and legal actions in this regard. Execution of each party’s obligations under the MoU is ongoing. In Tanzania, the TCRA found that Vodacom Tanzania had failed to comply with regulatory Quality of Service (QoS) targets in May 2023, mostly in the Zanzibar region, and has ordered Vodacom Tanzania to implement network improvements, with threat of fines if it fails to comply. Vodacom Tanzania completed implementation of five sites to address this matter in July 2023 and continues to ensure more improvement on optimisation is done to ensure coverage is maintained. Vodacom plans to roll out 30 additional sites in the Zanzibar in June 2024. In Lesotho, the NRA (‘LCA’) has found Vodacom Lesotho in contravention of rule 6(a)(i) of the Quality of Service Rules, 2023 for the four hours network outages experienced on 16 June 2023. The LCA issued a fine of Maloti 1.0 million, but suspended execution of the fine for a period of 12 months, on condition that Vodacom Lesotho does not commit a similar contravention within that period. A recent network outage experienced in February 2024 by Vodacom was due to a fiber cut resulting from ongoing municipal construction work. Vodacom has reported the root cause of the outage to the LCA. Networks and access In Turkey, Türk Telekom’s reference offer regarding fibre access was approved by the NRA in June 2023, three years after the market analysis obligating fibre access. As expected, due to macroeconomic conditions, port and transmission prices have been increased by 70% effective as of 1 July 2023 within the offer, as well as an increase on the one-time fees. Vodafone Turkey continuously engages with relevant stakeholders and considers all remedies to ensure better access conditions are provided. We are also planning to conduct a workshop with BTK as a part of their continuing engagements to convey their key asks regarding fixed access competition, access and deployment issues. At the same time, Vodafone Turkey has taken the decision to court, and the legal proceedings are ongoing. In Tanzania, the NRA (‘TCRA’) completed the market review study to update the Interconnection Rates Determination No.5/2017 to determine mobile termination rates that expired in December 2022. On 14 July 2023, the TCRA published a notice setting a new glidepath for MTRs for the next four years to 2027, to be applied retrospectively from 1 January 2023. The new glidepath is as follows: TZS 1.86 for 2023; TZS 1.76 for 2024; TZS 1.68 for 2025; TZS 1.60 for 2026; and TZS 1.52 for 2027. The glide-path represents an average decline of 5% per annum up to 2028. In Egypt, Vodafone Egypt is in the process of shutting down 3G technology by end of 2026. The NRA (‘NTRA’) will define an industry 3G shutdown roadmap in line with Vodafone Egypt’s own roadmap.
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